A radical redesign of the UK benefits system for gig economy workers could draw inspiration from a French scheme that covers art industry workers writes Guillaume Wilemme and Piotr Denderski of the University of Leicester School of Business and Helene Benghalem of Lausanne University.
From independent contracting and self-employment to on-call and temporary contracts, non-standard work arrangements (NSWAs) apply to 20% of British workers. These workers face particular challenges in a world where social security was designed with permanent full-time employment in mind. With the potential further ‘gigification’ of the labour market, existing social security policies may need a fundamental redesign, rather than a simple patch.
As part of our work on the ‘Redesigning Labour Market Policies for the Future of Work’ project funded by the Nuffield Foundation, we looked at a scheme that covers the art industry in France, the ‘Intermittents du Spectacle’ (IDS) scheme. As the art industry in France is essentially a mature and well-regulated gig economy, this scheme offered us insights into how such a scheme might be applied to the UK economy.
What makes the IDS scheme unique is that art workers are employed despite the discontinuous nature of work and thus enjoy the social benefits of employment contracts. The IDS scheme provides employment status because employers are allowed to use flexible fixed-term contracts with art workers with no termination cost, which relaxes the French labour law. In addition, the scheme offers unemployment benefits to art workers based on different criteria than those applying for standard employees in France. The criteria take into account that workers have a very fragmented employment history. Art workers just need to prove that they have worked 507 hours in the last twelve months, regardless of how many employers they worked for. If they meet this threshold, they receive defined benefits alongside income from working. This income then proportionately adjusts the level of benefits downward.
Using data from the French administrative agency UNEDIC that manages the benefit payments; and the FH-DADS, which is a representative random sample of all French workers, we were able to get a full picture of IDS workers in France. More specifically, the majority of art workers accrue benefits from the scheme in addition to their labour income, and they strongly respond to incentives to meet the eligibility threshold. Having done so, we made three recommendations to policymakers who might look for inspiration to extend such a scheme to the UK gig-economy.
First, in sectors where standard stable employment is prevalent, a blanket policy that would apply to the entire labour market may risk displacing workers from the regular market to unstable jobs. In the art industry, this substitution effect is low because standard employment is not convenient to start with, owing to the nature of work based on gigs. To avoid destabilising a sector in which employment status is stable, a new social protection scheme for NSWAs should adopt a sector-specific approach.
Second, to determine the generosity of protection offered to NSWAs, policymakers should assess the threat of informality and the social benefits of NSWAs. The IDS scheme is quite generous, which creates strong incentives for workers to join the scheme instead of contemplating working in the informal economy. A reason for its generosity is the social value that arts bring to society. Although generous protection for NSWAs would also mitigate informality, the social value of NSWAs is harder to define. On the one hand, NSWAs can help workers transition to stable employment, a stepping-stone effect of positive social benefits. On the other hand, NSWAs may be used by employers to avoid the potential costs and commitment of standard employment, a casualisation effect of negative social benefits. These effects should be quantified to determine the generosity of a new social protection scheme.
Third, the eligibility and benefit rules should minimise incentives to game the system. There should be no gains to collude between employers and workers. For instance, The IDS scheme generates perverse incentives to misreport hours worked to gain eligibility faster in cooperation with employers. Workers understand the eligibility rules well and seem to optimise their work activity accordingly. This response means that policymakers must choose policy parameters carefully. In the UK context, the use of total income, and not hours worked, as the eligibility criterion should be maintained.
Dr. Helene Benghalem is a Postdoctoral Fellow in Economics at the University of Lausanne.
Dr. Piotr Denderski is Lecturer in Economics in the Department of Economics, Accounting and Finance at the University of Leicester School of Business.
Dr. Guillaume Wilemme is Lecturer in Economics in the Department of Economics, Accounting and Finance at the University of Leicester School of Business.
You can find out more about the ‘Redesigning Labour Market Policies for the Future of Work’ project funded by the Nuffield Foundation here and the report here.
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